United Kingdom

A number of corporate structures are available in the UK, as described below:

The UK limited liability company
The UK company as nominee for an IBC
The UK company with Cyprus branch

The UK limited liability company

Governing legislation

The UK Companies Acts of 1985 and 1989.

Permitted activities

The company may freely conduct any business activity which does not require special licensing.

Length of time to incorporate

Normally one week. Same day incorporation is available upon payment of a surcharge. Shelf companies are also available.

Information held on public record

Memorandum and articles of association and details of issued capital, registered office, shareholders, directors, secretary and mortgages and charges. The identity of the company’s beneficial owners is not disclosed.

Company name

The name must include the word “Limited” or its abbreviation “Ltd” to denote limited liability status.

Share capital

May be denominated in any currency. At least one share must be issued upon incorporation. The standard authorised share capital upon incorporation is £1,500 or foreign currency equivalent.

Requirements as to shareholders

Minimum of one shareholder, who may be a natural person or body corporate. The use of nominee shareholders is possible.

Requirements as to directors

Minimum of one director, being either a natural person or body corporate.  Directors may reside anywhere in the world.

Shareholders’ and directors’ meetings

May be held anywhere. An annual general meeting of the shareholders must be held in each calendar year, with consecutive meetings not more than 15 months apart.  The first meeting must take place within 18 months of the company’s incorporation.

Registered office

A registered office must be maintained in the UK, where the company’s statutory registers should be kept.

Company secretary

May be a natural person or body corporate.  In the case of a sole director, the same person may not be both director and secretary.

Audit of financial statements

Audited financial statements are required where annual turnover exceeds £1 million.

Annual filing requirements

An annual return needs to be filed with the Registrar of Companies. Financial statements are filed with the Inland Revenue and the Registrar of Companies.

Taxation

Refer to the UK tax rates summary.

VAT

If the company will be trading within the UK or Europe, it will need to register for VAT.

Other considerations

As the company will be resident in the UK for tax purposes, it will have access to the UK’s very extensive network of double tax treaties.

The UK company as nominee for an IBC

Background

It is possible for an agreement to be entered into between a UK company and a company registered in another jurisdiction (typically an IBC), whereby the UK company is appointed as nominee of the foreign company. It is also possible, under UK law, for the agreement to provide that the identity of the foreign company be kept confidential and not revealed to any third party. Under such an agreement, the foreign company would be beneficially entitled to all income generated by the UK company’s activities and the latter would receive a fee for providing this service, which may be a fixed sum or a commission based on turnover. This arrangement can lead to substantial tax savings when the foreign company or IBC is not subject to tax in its own country of residence.

The general description of the UK limited liability company applies to this structure, with the following exceptions: 

Permitted activities

The company may conduct any business, provided that this does not take place within the UK.

Taxation

Refer to the UK tax rates summary.

Tax will only apply to the fee which the UK company will charge to the foreign company, after all allowable expenses have been deducted.

Other considerations

The company is not considered resident in the UK for tax purposes and will therefore not have access to the UK’s double tax treaties.

The UK company with Cyprus branch

Background

By virtue of section 249 of the UK Finance Act of 1994, where a UK registered company has its "place of effective management" in a country with which the UK has signed a double tax treaty and is thus not managed and controlled in the UK and where such treaty contains a "tie-breaker" clause for situations where the company could be considered as resident in both countries, then the company will be resident in the foreign country and not in the UK for tax purposes. Since the double tax treaty between the UK and Cyprus contains the necessary clause, this means that a UK company which is managed and controlled from a branch located in Cyprus will be resident in Cyprus for tax purposes.

Governing legislation

The UK Companies Acts of 1985 and 1989.

Permitted activities

The company may conduct any business, provided that this does not take place within the UK.

Length of time to incorporate

Normally one week but same day registration is possible at a surcharge. Shelf companies are available. A further two weeks are required  for the Cyprus tax residence certificate to be issued.

Information held on public record

Memorandum and articles of association and details of issued capital, registered office, shareholders, directors, secretary and mortgages and charges. The identity of the company’s beneficial owners is only disclosed in Cyprus, but is not publicly available. This disclosure can be avoided using nominees.

Company name

The name must include the word "Limited" or its abbreviation "Ltd" to denote limited liability status.

Share capital

Denominated in any currency. At least one share must be issued upon incorporation.

Requirements as to shareholders

Minimum of one shareholder, who may be a natural person or body corporate. The use of nominee shareholders is possible. Cyprus resident shareholders are recommended to fully demonstrate tax residence in Cyprus.

Requirements as to directors

Minimum of one director, being either a natural person or body corporate. The directors must be resident in Cyprus.

Shareholders’ and directors’ meetings

Should be held in Cyprus so as to demonstrate local management and control.

Registered office and Cyprus branch

A registered office must be maintained in the UK and a branch office is required in Cyprus.

Registered agent

A registered agent needs to be appointed in Cyprus, to whom official notices may be addressed.

Company secretary

May be a natural person or body corporate.  In the case of a sole director, the same person may not be both director and secretary.

Audit of financial statements

Audited financial statements are required in Cyprus but for UK purposes, only where annual turnover exceeds £1 million.

Annual filing requirements

An annual return needs to be filed in the UK. Financial statements are filed with the Registrar of Companies in the UK and Cyprus and with the Cyprus tax authorities.

Taxation

Cyprus income tax applies at the rate of 10% on the company’s worldwide income.  Substantial changes came into effect on 1 January 2003 in relation to taxation in Cyprus, as described in our 2002 Cyprus tax reforms article.

Other considerations

The advantage of this structure is the possibility of enjoying the prestige and respectability of a UK company, while reducing its tax exposure to 10%. VAT registration in Cyprus may be necessary, depending on the nature of the company’s activities.